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China expected to move through middle-income stage following L-shaped trajectory

(People's Daily Online)    15:11, June 24, 2016
China expected to move through middle-income stage following L-shaped trajectory
(File Photo)

China is expected to move across middle-income stage following L-shaped trajectory and exceed the 'high income threshold' in 2022; in the next few years, more efforts should be used to improve income distribution and allow people to more so be in a state in which they are "getting sense", said Cai Fang, vice president of Chinese Academy of Social Science (CASS) on Thursday in Beijing.

The biggest problem of the Chinese economy is slowdown and all the other issues that are derived from it. But what causes slowdown? We need scientific analysis and clear understanding, said Cai in his speech delivered at the launch of the book China's Domestic Transformation in a Global Context jointly held by the National School of Development at Peking University and Social Science Academic Press. 

Cai believes getting old before getting rich is a feature of the population ageing phenomenon in China which cannot be ignored. The demographic dividend has disappeared when per capital GDP is at a relatively low stage and China's potential growth rate is declining: it stood at 10% before 2010, dropped to 7.6% during the Fifth Five-Year Plan (2011-2015) and was estimated to further slip to 6.2% during the Thirteenth Five-Year Plan (2016-2020). 

Factors which have led to economic slowdown cannot be solved by stimulation and to achieve a L-shaped path growth will depended on the push of supply-side structural reforms, which will bring dividends, said Cai. 

"Supply-side structural reforms should be carried out at various fields, including an increase in the labor force participation rate, the level of human capital, total factor productivity, fertility and reduction in business costs, thereby enhancing the potential growth rate," Cai said.

In the regard of prospects for development, Cai believes China is expected to move through a middle-income stage following a L-shaped trajectory. 

In 2014 China's per capita GDP was $ 7,4 00, which belongs to the upper middle-income stage, if it is calculated in accordance with potential growth and constant prices, per capita GDP in 2022 will reach $ 12,600, which is defined by the World Bank as the upper middle-income stage and threshold stage of high-income.


(For the latest China news, Please follow People's Daily on Twitter and Facebook)(Editor:Liang Jun,Bianji)

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